House prices up £1,100 as London market powers ahead - but rest of the country stagnates

The average property price in the UK rose by 0.8 per cent in July, or more than £1,100, as demand for ‘premium’ homes has continued to grow sharply.

Data from the Land Registry revealed that the average UK house price in July was £162,900, up from £161,777 the month before. It means prices are up 0.3 per cent over the course of the year. But outside of London, where prices rose by 6.5 per cent annually, only the East,
South East and East Midlands witnessed any growth in house prices over
the year - albeit under one per cent.

The Land Registry figures also show that
the number of properties worth more than £1m sold in the year to May
rose from 271 to 562.

Racing ahead: Property in London continues to prop up the rest of the market - houses in Kensington and Chelsea, for instance, rose by 16.1% in the last year

London's mini-boom stands in contrast to the rest of the country's stagnation, with Tracy Kellett, director of buying
agents BDI Home Finders, describing the property market as 'dancing in slow motion on the spot.'

House prices in London hugely outperformed other regions, with it seeing values up 6.5 per cent over the last 12 months and the next best performing region the East seeing prices rise by 0.8 per cent over the same period. The capital accounts for most sales of properties over £1million, 403 of the 562.

Some parts of London witnessed double-digit growth in property values. The boroughs of Kensington and Chelsea, City of Westminster and Hammersmith and Fulham saw 16.1 per cent, 14.4 per cent and 10.6 per cent growth respectively.

It also means the average property in Kensington and Chelsea is almost £1.1million, the highest of any area in the country.

At a more local level, houses in the Welsh county of Powys saw 7.7 per cent growth while the Royal Borough of Windsor and Maidenhead, located just outside the capital, had growth of 5.5 per cent.

Annual price change: The green patch shows how prices in London have soared in the last year

The North West had the steepest falls, with prices dropping 3.9 per cent year-on-year, while the North East saw a 3.8 per cent fall.

Yorkshire and the Humber, the South West, Wales and the West Midlands also saw prices fall, but not as drastically.

The Welsh town of Merthyr Tydfil saw the biggest fall, with property prices falling 8.4 per cent. Stoke-on-Trent in Staffordshire saw 7.9 per cent falls and the Welsh town Wrexham saw prices tumble 7.9 per cent.

The number of completed house sales in England and Wales decreased by 19 per cent to 41,244 in April, the last month for which figures are available, compared with 50,721 last year. The number was lower because many buyers pushed their move forward to beat the end of the stamp duty holiday for first-time buyers in March.

The positive Land Registry figures are at odds with data from Nationwide. The building society earlier this month found that house prices had dropped 2.6 per cent in the last year, meaning the average property in the UK is worth £164,389, according to the index.

This, however, means Nationwide still values the average property at almost £2,000 more than the Land Registry.

Steady: London prices have raced ahead, by across the rest of England and Wales have remained fairly steady

'Housing market dancing in slow motion on the spot'

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'The Land Registry data is less gloomy than some of the other house price indices and yet the housing market in parts of the country really is suffering.

'The jury is still out on whether the Bank of England’s emergency funding will have the desired effect.'

Tracy Kellett, director of the buying agents BDI Home Finders, said: ‘Like a drunk uncle at a wedding, the housing market is still dancing in slow motion on the spot.

‘For every small step forward, there is an ungainly lurch backwards. So while London is making strong progress, prices are still dropping in the North.

Monthly sales: House sales have fallen drastically since pre-2008

‘All this despite a buoyant first half of the year, when we saw many would-be buyers come off the fence and start househunting in earnest.

‘Transactions have certainly slowed over the summer but then that's to be expected.

‘We're not expecting fireworks in the autumn. With the economy where it is, and lenders still pedantic at higher LTVs, the market will continue to plod along for the foreseeable. Every sale is a struggle.

Ashley Alexander, director, estate agent review website meetmyagent.co.uk, said: ‘The summer months are traditionally quieter, and that effect has been magnified by the Olympics effect in July and August. The Land Registry data has a significant lag effect, and has yet to show the full impact of the quiet summer.

‘With estate agents facing tough competition to win instructions from sellers, many have been tempted into valuing high. But it remains very much a buyer's market, and only the competitively priced properties are selling well.’